L.A. Sales Tax Hike Battle Heats Up

By Elizabeth Hsing-Huei Chou, City News Service

Los Angeles city officials made another push Wednesday for a half-cent sales tax measure on the March 5 ballot, saying its passage would bridge a projected $216 million deficit and prevent further blows to municipal services.

The looming vote on Proposition A continues to drive discussion of what needs to be done about the city’s budget shortfall, which officials say remains a challenge as expenditures — mostly in the form of better-managed, but still rising pension costs — are expected to outpace city revenue.

“I think the question before most voters is, is the status quo acceptable?” Chief Administrative Officer Miguel Santana said in during a status report to the City Council.

Earlier this week, Mayor Antonio Villaraigosa endorsed the proposition after staying quiet for weeks, even as top mayoral candidates came out against it.

In a series of jabs at recent statements made by several of the candidates, Councilman Paul Krekorian, who chairs the Budget and Finance Committee, said most of the solutions the mayoral hopefuls have offered up as alternatives to the tax “don’t add up” in light of the numbers in Santana’s report.

“There are those who would say we can solve this problem by addressing “waste, fraud and abuse,’ and that’s clearly nonsense,” said Krekorian, who added that a campaign promise to increase the number of police officers is also unfeasible.

“There are those who say we can solve this problem by doing pension reform,” he said. “It’s mathematically untrue to say that … There are some who say we need to attract more business … we need to do more of it of course, but it’s not enough in and of itself,”

City Council candidate Matt Szabo, who served at one time as Villaraigosa’s budget adviser, criticized his former boss’ endorsement, saying the deficit figures are overstated and that the city’s financial situation is not so dire, the Los Angeles Times reported.

Such attacks from candidates on the sales tax measure and the media’s focus on them proved irksome to some council members.

“I’m getting fed up with the media misunderstanding or confusing this whole (half-cent) sales tax,” said Councilman Bill Rosendahl, who sits on the Budget and Finance Committee. “We have to do it if we want to be able to maintain police and fire. Would you give us a little more credibility … especially when you hear these pandering mayor candidates … This is a good deal for my folks.”

Krekorian said “tremendous progress” has been made in recent years through cuts and pension reforms.

According to Santana, the city also socked away $80 million in a one-time budget stabilization fund, and expects to see another $18 million set aside for a “rainy day,” after city employees union discovered unused money left over from previous years.

He explained that a healthy reserve fund and the budget stabilization improves the city’s bond rating and increases its chances of landing loans.

But even with the positive steps, Santana expressed concern that without sufficient revenue sources, the cuts would soon have a “significant impact on the city’s ability to meet basic services.”

He said the city “engaged in a long-term strategy” four years ago that resulted in cutting the upcoming year’s projected $1 billion deficit to $216 million, mostly through employee and service reductions, as well as having employees pay a percentage of their retiree health care costs.

In the last four years, city officials approved cuts in staffing levels for more than 5,000 employees. But according to Santana, still more is expected of administrators, including coming up with a way to address an additional $144 million that the police and fire departments have requested just to maintain staffing levels next year.

“The challenge becomes, what else do we cut?,” he said.

There is not much left to cut, according to Santana, who explained that 95 percent of the city’s budget is made up of either restricted funding – such as sewer fees, grants and the gas tax, that are designated for specific uses – or funding that goes to keeping essential services such as public safety, recreation and parks and public works, leaving only 5 percent of the city’s budget, $360 million, to work with when addressing budget shortfalls.

The approval of the tax measure would set the stage for the city to bounce back, proponents say.

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